A credit to your cause

When I first went to Paris, as a teenager at the beginning of the 80s, I can remember my surprise at seeing begging accepted as part of everyday life. I'd thought that begging bowls and outstretched hands belonged to the middle ages, not a modern capital city.

Of course, that's all changed, and for young people in London now, it's hard to realise that begging was once almost unknown in our capital. There were always a few chronic boozers cadging the price of a drink but widespread public begging did not exist.

But somewhere in the mid-80s, on the back of unemployment and a brutalisation of public culture, begging moved into London and then spread out across the country, so that almost every high street now has someone rattling a bowl.

If begging has become institutionalised, so too has a parallel culture of giving. Forget old-fashioned door-to-door collections and jumble sales; charities have stepped up into far more sophisticated operations, with targeted advertising, mailshots and corporate sponsors.

An increasingly popular way for charities to raise funds is to have their own credit cards, with a donation being made for every transaction. These have a definite feel-good appeal, letting us believe we're giving to a good cause even when we're being utterly self-indulgent. We might be treating ourselves but we're also doing something for charity.

It might be convenient and the only way that we'd ever have time to give anything, but is it a good deal and an efficient way of donating? At the risk of sounding uncharitable about charities, the honest answer is: not really.

Interest rates charged by charity credit cards are generally higher than for conventional cards. If you have an Amnesty International card there is an 19.8APR, while Oxfam and the NSPCC have cards charging 19.9APR, 9% above the best rates available.

Now this won't matter if you pay off your credit card bills within the interest-free period, but most of us end up carrying forward a balance (the average credit card balance is ?675), which means paying extra interest charges. This wouldn't matter so much if the extra interest went to the good cause, but it goes to the credit card company. The donation to the charity is a percentage of how much money you spend on the card, typically 0.25%.

It has to be said that this isn't hugely generous - ?1 for every ?400 spent. The calculation you need to make is whether the donation is larger than the amount you're paying extra in interest because if it isn't, you'd be better off getting a cheaper credit card and setting up a standing order for the charity. Otherwise, your main donation will be to the credit card company.

If you use a Help the Aged card, there is a donation of 0.25% of purchases and an interest rate of 19.8APR. This means that if you had a balance of ?1,000, the monthly interest charge would be ?15.20, while the donation to charity would be ?4.

But if you had an Egg credit card, currently charging 10.9APR, there would be a monthly interest charge of ?8.69 - more than ?6 cheaper than the charity card. And if you don't pay off the balance, you could be paying the ?6 extra every month, while the ?4 donation will only be paid once.

Another form of donation is a flat payment for each transaction. The National Trust's card offers 5p per purchase, which would mean you'd need to make 200 purchases before the Trust received ?10.

The majority of cards also make an initial payment to the charity when you sign up for a card. These range from ?2.50 for the British Dental Health Foundation up to ?10 for the Cancer Research Campaign (which also has the best interest rate for a donation card of 16.7APR).

There's no doubt that the expansion in the charity card market reflects its success in fundraising. For the recipients it's a regular and uncomplicated income and for the donors it's a hassle-free way of supporting a cause.

And if we follow the example of the United States, where the affinity card concept has already reached much further, we can expect almost every organisation, cause and profession to have its own credit card.

But we should also expect the rates on offer to improve, because wanting to be generous shouldn't be interpreted as wanting to pay over the odds.

Although at present, it's interesting to note that among the most expensive cards available are those supporting the Battersea Dogs Home, Elvisly Yours and Mensa. No comment.

Email: coughlan-sean@hotmail.com